6 May 2016 – Non-Farm payroll underwhelms, indices closed higher

The market waited for the April Non-Farm payrolls report and it created the expected volatility in the indices. It came in at 160K which was below the expected 200K estimate. Private payroll jobs report were at 171K versus estimate of 195K. Prior month was revised downward to 208K from 215K. Unemployment was flat at 5%. Participation rate slide to 62.8% from 63%. Hiring slowed to 200K for the last three months. Average wages rise by 0.3% to $25.53 an hour.

The indices were down pre-market and swung wildly up and down before rising steadily upward by midday. All the indices closed slightly higher from the previous day but overall, lost for the week. Oil is down for the week and gold is flat. The dollar index gained for the week. Earnings season starts to wind down next week.

Dow Transportation swung up and down till mid morning before buyers came in. It traded steadily upward to close with a bullish harami candle below its 200 SMA. Momentum remains downward. Daily volumetric buying pressure is at 49.4%.

On the weekly chart, the buying pressure is at 86.6% and it closed the week with a bearish candle below its weekly 50 SMA and on its 21 EMA.

Dow Industrial swung up and down till midday and found support on its 50 SMA. It traded steadily upward to close with a bullish candle on its 8EMA. Momentum remains downward. Short term volumetric buying pressure is at 98.9%.

On the weekly chart, the buying pressure is at 96.8% and it closed the week with a spinning top doji candle above its weekly 8 EMA.

Russell 2000 swung up and down and then traded steadily upward by late morning. It bounced off its 50 SMA and closed with a bullish hammer candle below its 200 SMA. Momentum remains downward. Volumetric buying pressure is at 75.5%.

On the weekly chart, the buying pressure is at 91.8%. It closed below its weekly 50 SMA and on its 8EMA with a bearish candle.

Nasdaq 100 range traded till late morning when buyers came in. It traded steadily upward to close with a bullish engulfing candle below its 8 EMA. Volumetric buying pressure is at 84.6%. The Nasdaq 100 is in a monthly Squeeze.

On the weekly chart, the buying pressure is at 84.6%. It closed with a doji candle below its 8EMA, 21 EMA and 50 SMA.

S&P 500 swung up and down till late morning and found support on its 50 SMA. Buyers came in and it traded steadily upward to close with a bull engulfing candle. Volumetric buying pressure is at 98.6%. The S&P 500 is in a daily and monthly Squeeze.

On the weekly chart, the buying pressure is at 94.3%. It closed with a doji candle above its 8 EMA.

Commodities
Oil (/CL) futures closed at $44.56 per barrel making a weekly loss of $1.43. Gold (/GC) futures closed at $1289.7 an ounce making a weekly loss of $5.2. Silver (/SI) futures closed at $17.505 an ounce which is a weekly gain of $0.385 an ounce. Agriculture ETF (DBA) closed at 20.88 making a loss of $0.20. Commodities (DBC) ETF continues its upward trend and closed at 14.12 just below its 200 SMA.

Bonds
Junk bonds ETF (HYG) closed at 82.53 on its weekly 50 SMA. Bonds ETF (TLT) closed at 130.45 making a gain of 1.07.

Currencies
USD/JPY closed at 107.11. EUR/USD sold off and closed at 1.1406. The dollar index (/DX) is at 93.830 and is Squeezing downward.

Relative Strength – Sectors
On a monthly lookback, the ETFs outperforming the S&P 500 are XLE, XLF, XLU, XLB, XLP, XLY, XLI and XLK respectively. Consumer discretionary (XLY) and Consumer Staples (XLP) made steady gains. Technology made a big move for the week.

On a 3-month lookback, the relative strength order are XLE, XLB, XLF, XLY and XLI.

Market Internals
Vix closed at 14.72. Vix futures is at 15.725. Volatility has increased. Skew is at 120.82. Market sentiment is neutral. Market breadth is sloping downward. Volumetric accumulation/distribution is sloping downward as well.

The Week Ahead
Is the US economy in a recession already? That is a question on many people mind as it will indicate the direction that this market will move. Bear market is more likely in a recession and current earnings for this quarter does not indicate that the market will break to new high. Without QE, without good earnings, where else will the money come from to push the market to new high. It can range trade for a while before investors have to make a decision where to park their money. Already, the bond market is starting to attract investors to put their money there for safety.

The prognosis is that the market will continue to come under selling pressure for the coming week.

To YOUR wealth!